2006 (12) TMI 289 - AT - Central Excise

Summary

Issues involved:
The issue involves the disallowance of exemption under Notification 6/2002-CE for IC engines used in the manufacture of tractors falling under Chapter Heading 87.01 due to the application of Note 2(e) to Section XVII of the Central Excise Tariff Act, 1985.

Summary:

Issue 1: Disallowance of exemption under Notification 6/2002-CE
The Tribunal considered the disallowance of exemption under Notification 6/2002-CE for IC engines used in the manufacture of tractors under Chapter Heading 87.01. It was noted that machines and apparatus of Heading 84.08 are not considered parts and accessories under Note 2(e) to Section XVII of the Central Excise Tariff Act, 1985.

Issue 2: Precedents and Circulars
Referring to the decision in High Energy Batteries (I) Ltd. v. CCE, Trichy - 2002 (142) E.L.T. 266 and CBEC Circular No. 512/8/00-CX dated 10-2-2000, the Tribunal set aside the demand and penalty imposed. Additionally, Circular No. 839/16/06-CX dated 16-11-2006 clarified that parts falling under any Chapter used in the manufacture of goods of Heading 8701 are exempted under Notification No. 6/2002, regardless of the specific chapter of the product.

Decision:
Based on the above considerations, the Tribunal set aside the impugned order, allowed the appeal, and provided consequential relief to the appellant. The stay petition was also disposed of accordingly.